Landlord and Tenant Act 1954 explained

What the Act does

The 1954 Act was passed to stop business tenants losing the goodwill built up at premises simply because a lease ran out. Part II of the Act does that in two ways. First, a protected tenancy does not end on its contractual expiry date: it continues automatically on the same terms until it is ended in one of the ways the Act allows. Second, when it is ended, the tenant has a statutory right to apply to the court for a new tenancy, and the court must grant one unless the landlord makes out a ground of opposition.

Everything else in Part II — the notices, the deadlines, the rent formula, the compensation — exists to make those two rights work in practice.

Which tenancies are protected

Section 23 sets the test: the premises must be occupied by the tenant for the purposes of a business carried on by the tenant, or partly for those purposes. Occupation and business use decide the question, not the label the parties put on the document.

Several arrangements sit outside protection: tenancies at will, genuine licences, fixed terms of six months or less without renewal rights, service tenancies, agricultural and mining tenancies, and tenancies where the parties completed the contracting-out procedure before the lease was granted.

How a protected tenancy is ended or renewed

There are three routes that matter in practice. The landlord serves a section 25 notice specifying a termination date between six and twelve months ahead, stating whether a new tenancy is opposed. The tenant serves a section 26 request proposing the terms of a new tenancy, again six to twelve months ahead. Or the tenant simply leaves: a tenant who vacates by the contractual expiry date, or who serves a section 27 notice, brings the tenancy to an end without renewal.

Once a section 25 notice or section 26 request is in play, the parties negotiate. If they cannot agree, either can apply to the court — but the application must be made before the statutory deadline, unless both sides agree in writing to extend it.

The terms of the new lease

If a new tenancy is granted, section 32 fixes the property, section 33 the duration (up to fifteen years), section 34 the rent, and section 35 the other terms. Section 34 requires an open-market rent, disregarding the tenant's occupation, its goodwill and most of its own improvements. Section 35 starts from the terms of the old lease, and the party asking for a change must justify it.

The deadlines that decide cases

The Act is unusually unforgiving about time. A section 25 notice or section 26 request that gives less than six or more than twelve months is bad. A court application made after the statutory deadline is out of time, and the right to a new tenancy is lost outright — there is no general discretion to extend. Agreements to extend must be made in writing before the current deadline expires.